• Gold consolidates in upward probability
  • Continued instability could push prices higher
  • Supply disruptions and volatility hit the broader market

Gold prices took a breather and retreated slightly on Friday. This is because the market's attention has turned to Jerome Powell and a possible rise in the Fed. This is the main catalyst for consolidation, although there is still a good chance that prices could rise further depending on what happens in Ukraine and Russia. Any further escalation here will almost certainly impact traders. In other commodities news, oil prices remain at extremely high levels and other precious metals are seeing mixed fortunes with supply constraints at play.

Potential upside looks more certain

The main driver of Friday's rise in gold prices was the increasing likelihood of higher interest rates. This led to gold trading down about 0.3% on Thursday after similarly weak demand. The two-day decline stems from Thursday's inflation data. This showed that inflation was even higher in February, with the CPI at a 40-year high.

The continued growth in inflation will almost certainly see the Fed move higher next week. If there was any doubt that the ongoing conflict in Ukraine had changed course, the sizzling inflation data once again exacerbated the need for a rise. Gold closed the day slightly above $1,990, but remains on track for an overall weekly gain.

Still has room to rise

Despite ending the week on a lower note, gold could still move further to the upside and break the $2,000 barrier. Much will depend on the geopolitical landscape and the next move between Russia and Ukraine. As recent attempts at negotiations seem to be fruitless, gold prices could move higher next week if the aggression continues.

This will allow gold to make more use of its well-known safe-haven ability. Similar to assets such as the U.S. dollar and some other precious metals, gold prices typically move higher during periods of uncertainty as traders become more risk averse.

Mixed bag of other precious metals

While oil prices continued at extremely high levels following the decision by the United States and other Western countries to stop using or get rid of their dependence on Russian oil, other precious metals had a mixed week. As with equity markets and other assets, this period was marked by increasing volatility and unpredictability, with more pronounced swings occurring almost daily. This did not exclude precious metals, with palladium prices up nearly 1% on Friday.

Silver prices fell slightly on Friday but remained above $25, while platinum had a less impressive week. Gold ended the week higher, but still faced its biggest one-week loss since late 2020.